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Friday, 1 February 2013
SilverCrest Mines almost doubles La Joya resources with further potential for expansion
SilverCrest Mines (CVE:SVL)(NYSE MKT:SVLC)(AMEX:SVLC) has unveiled this morning a sharply higher updated resource estimate for its La Joya property in Durango, Mexico, sending its stock up, with the company saying there is "excellent" potential for additional resources.
Shares of the Vancouver-based company rose over 2.8% to $2.53 as of 10:30 am ET.
At a global case cut off grade of 15 grams per tonne of silver equivalent, inferred resources now stand at 198.6 million ounces, almost 95% higher than the 101.9 million ounces at the same cut off grade previously.
Using a base case cut off grade of 30 g/t silver equivalent, inferred resources total 159.8 million ounces, or 100.8 million ounces using a high grade cut off of 60 g/t silver equivalent.
There are also 75.1 million pounds of inferred tungsten resources at the project, at a cut off grade of 0.05% tungsten, hailing from the Contact Zone on the property - which also contains gold, silver, copper and tin that could add secondary value.
The silver miner said that it believes the 60 g/t silver equivalent portion of the deposit, or the high grade case, constitutes a "priority area" to be examined as a potential starter pit for initial operations, which will be looked at more closely in a preliminary economic assessment (PEA) shortly.
The company added that the La Joya property has "excellent potential" for expanding resources, with the deposits being open in most directions. More infill and expansion drilling was recommended to increase and convert resources from the inferred to the indicated category.
GeckoResearch, a group of small Swedish private investors that share investment ideas through newsletters to subscribers, said today in a note that "La Joya is evolving itself as a world class silver project."
"There's still a lot of work to be done but today's release should hopefully start to get people's attention as the La Joya project hasen't really gotten much valuation by the market."
The report, done by EBA Engineering Consultants, was based on phase I and II drill results, as well as surface sampling programs and historical data. The junior silver producer said last year that initial metallurgical studies suggest the La Joya deposit could be amenable to conventional copper concentrating with high grade silver and gold components.
It noted that the nearby Sabinas mine, which is considered to be a similar deposit style to La Joya, has been in production for years and is currently producing at an estimated rate of 4,000 tonnes/day and shipping flotation concentrate overseas.
SilverCrest is already in production from its Santa Elena mine in Sonora, Mexico, where a three year expansion program is underway to double metals production, while also developing its large polymetallic La Joya property in the country.
In a research note late last year, Stonecap Securities analyst Christos Doulis noted that at current share prices, investors were the getting the Santa Elena mine for a "good price" and were "paying nothing" for the La Joya project.
The company produced 579,609 ounces of silver in 2012 - exceeding market guidance for 435,000 ounces of silver by 33%. The company said silver production continues to set quarterly records due to improvement in recoveries and higher grade ore being loaded on the phase II leach pad, which was completed on schedule and budget, adding two years of capacity.
For 2013, the company is targeting the completion of a new 3,000 tonne per day mill facility at Santa Elena, with commercial production anticipated in the first quarter of next year.
It is also aiming to produce 625,000 ounces of silver for the year and 33,000 ounces of gold, for 2.4 million ounces of silver equivalent - with consistent production levels expected each quarter. Cash costs are estimated at $850 per silver equivalent ounce.